Why the best way to encourage digital innovation is not to fund it

CIOs face growing pressure to help their organisations develop innovative technology that will keep them ahead of the competition.

That is on top of their day job, which is to maintain the technology that will keep the business running.

“Here are the two roles: keep everything going; and, at the same time, disrupt,” says Frazer Bennett, a member of PA Consulting Group. “It is fundamentally impossible.”

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PA Consulting develops technologies for clients across multiple industries, and its specialisms include analytics, robotics and security.

Bennett runs a laboratory full of creative people in Cambridge, comprising 250 scientists, software specialists, engineers and chemists, but their budget comes from its clients so they have to do what the clients want.

So, what happens when PA’s engineers and programmers come up with an innovative idea? “I don’t fund them,” says Bennett.

It sounds counter-intuitive, but Bennett believes that funding good ideas causes more harm than good.

Everything about PA Consulting is designed to encourage innovation. Its top managers encourage people to “rock the boat” and reward ideas, as well as people’s performance.

“Innovation is not a department,” says Bennett. “You can’t just put a name on a door or have a bunch of hackathons and expect it to happen. Innovation is in the culture.

“It starts at the top, when leaders show – not say – that innovation is important. They celebrate innovation because it is the culture they want to achieve.”

PA takes on interns during the summer, and gives them the freedom to pursue projects that do not have a commercial deadline.

The company’s laboratories in Cambridge happen to overlook arable farmland. “We had interns flying drones over the crops that were due to be harvested, using artificial intelligence to calculate crop yields, identify whether they were ready for harvest and where the weeds were,” he says.

Why leaders should protect people with ideas

Encouraging this sort of innovation may not require big bucks, but if CIOs want it to develop in their organisations, doing nothing is not an option.

The best business leaders will identify the innovators in their organisation – those who want to question the status quo to find new ways of doing things – and give them the breathing space to work.

More often than not, organisations are structured in a way that discourages innovation. They may not be full of truculent people pushing back, but commercial pressures can make life difficult for innovators.

“I don’t have a Dragon’s Den-style committee. I just make sure people have enough latitude to grow”

Frazer Bennett, PA Consulting Group

It’s the role of business leaders to protect innovators from the rest of the organisation, and to reward their input rather than their output.

In one case, the chief technology officer (CTO) of a top-tier pharmaceutical company identified an individual in his organisation who wanted to improve the effectiveness of the company’s drugs by combining them with smart sensor technology.

“The CTO was able to ring fence this individual, and give them enough budget and protection from people in the rest of the organisation who were focused on business as usual,” he says. “The CTO was rowing against the tide, and the brand holders and drugs developers were all pushing back.”

Not every idea will be a winner, so it’s important for leaders to allow their teams to work on a range of projects. It’s a matter of statistics: some will fail and some will work, and it’s a case of placing the right bets.

Innovation requires little funding

“It is surprising how little funding innovation needs,” says Bennett. Startups, for example, can make a big impact with very little cash.

“I don’t have a Dragon’s Den-style committee. I just make sure people have enough latitude to grow. If they believe in the idea, they will spend their own time and energy on it.”

There is a limit to how far one person can take an idea, and when they reach this limit, Bennett still argues that funding is not the solution. “Their next job is to persuade their mates they have a good idea,” he says.

Measuring glucose levels

For example, one of PA’s chemists was interested in new ways of measuring glucose levels in the blood. He started on the project in his own time, and then teamed up with an engineer and a software specialist.

“Rather than funding projects with review boards and targets, you let them get on with it, fuel it with the enthusiasm of the individual,” he says. “That can be a good filter. If they can’t enthuse their friends, maybe it’s not a good idea.”

In this case, the work on blood glucose turned out to be a very good idea. At that point, PA stepped in with funding to develop a business case.

It turned out that existing blood glucose meters were inaccurate, which was of great concern to the US Food and Drugs Administration. PA’s blood glucose meters showed a double-digit improvement in accuracy.

Within a year and a half, PA had run its own clinical trials, set up a spin-off company to exploit the technology, and is now negotiating licence deals with glucose meter manufacturers.

“We did it by trying not to come in early or pick winners, and letting the people who are closest to those ideas determine their success, rather than a team of executives who are not close enough to the challenge or the opportunity,” says Bennett.

3D printing in food manufacturing

PA’s latest idea is to use 3D printing technology to enable food manufacturers to produce products that are personalised to individual customers, while still retaining the scale and cost benefits of mass production.

“We are printing flavours, so you can have a production line producing cookies, crisps or potato chips which can individually coat the products with a customised flavour,” he says.